The Determinants of Online Review Informativeness: Evidence from Field Experiments on Airbnb

53 Pages Posted: 27 Jun 2018

See all articles by Andrey Fradkin

Andrey Fradkin

Boston University - Questrom School of Business

Elena Grewal

Airbnb

David Holtz

MIT Sloan School of Management

Date Written: April 20, 2018

Abstract

Reputation systems are used by most digital marketplaces, but their design varies greatly. We study how reputation system design affects the extent to which ratings and reviews aggregate information by using two experiments and complimentary observational analysis conducted on Airbnb. The first treatment that we study offered guests a $25 coupon in exchange for submitting a review. The second treatment implemented a simultaneous reveal review system, which eliminated strategic considerations from reviews. We show how both experiments made the reputation system more informative and use our findings to quantify the relative importance of mechanisms that cause inefficiency in reputation systems. We find that the largest source of inefficiency in reputation systems is sorting into reviews, whereby those who submit reviews typically have better experiences than those who do not. We also document retaliation and strategic reciprocity in the control group of our experiments but find that these mechanisms had small effects on the rating distribution. Lastly, we use observational analyses to document that social considerations also cause information loss in reputation systems. In summary, we find that reviews are typically informative but that negative experiences are underreported. We then discuss the implications of our findings for reputation system design.

Keywords: Reputation, Market Design, Digital Marketplaces, Field Experiments, Reciprocity, Information, Product Quality

JEL Classification: C93, D47, L14, L86, D8, L18, L83, M31

Suggested Citation

Fradkin, Andrey and Grewal, Elena and Holtz, David, The Determinants of Online Review Informativeness: Evidence from Field Experiments on Airbnb (April 20, 2018). Available at SSRN: https://ssrn.com/abstract=2939064 or http://dx.doi.org/10.2139/ssrn.2939064

Andrey Fradkin (Contact Author)

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

HOME PAGE: http://www.andreyfradkin.com

Elena Grewal

Airbnb ( email )

888 Brannan St
San Francisco, CA 94103
United States

David Holtz

MIT Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

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